Eric Daniels, boss of the bailed-out Lloyds Banking Group, is to retire next year after surviving repeated attempts by shareholders to force him out.

His retirement means that every high street bank will have installed new top management since the start of the banking crisis that forced taxpayers to pour more than £20bn in to Lloyds to ensure it survived the meltdown.

The only other bank boss to remain is Peter Sands at Standard Chartered, which does not have a UK branch network.

Daniels, who embarrassed himself before MPs in February 2009 by describing his £1m salary as "relatively modest", could walk away with shares and cash with a crude valuation of more than £14m. The bank would not comment on this figure. On top of this he will get an annual pension of at least £190,000 a year.

While speculation about Daniels's future has swirled for the two years since he championed the takeover of HBOS – formerly the Halifax and Bank of Scotland – the 59-year-old American's announcement that he would retire stunned the City and prompted speculation about who would succeed him at the bank with the biggest branch network in the UK.

The HBOS deal, announced two years ago amid fears of its imminent collapse, will be Daniels's legacy. While the takeover allowed him to argue that Lloyds could become a major player in the UK banking market, it left the enlarged bank exposed to massive bad debt and at the mercy of the Labour government, which pumped more than £20bn into it.

The merged bank was created only after Lord Mandelson overrode competition rules when he was business secretary. The new government has set up a commission to consider breaking up Lloyds.

Daniels was insistent today that he not been forced out and decided to announce his retirement now to allow the bank to find a successor after it had returned to profitability following losses sustained since the HBOS takeover.

"This is very much my decision," he said. "We will demonstrate that (buying HBOS) is something that has completely repositioned the bank … I think the shareholders and the taxpayer will do very, very well with their investment in Lloyds."

Lloyds chairman, Sir Win Bischoff, also said Daniels was not under pressure to go. Six weeks ago, when Lloyds announced a return to profit, the pair had to brush off questions over Daniels's future.

The shares rose on news of the departure, closing at 77.4p, giving the taxpayer a profit on its stake of around £1bn on the average price paid for the shares.